What is assets? meaning, definitions and types of assets

Assets

An assets is any owned physical object (tangible) or right (intangible) , having a money value. In other words, assets are economic resources which are owned by a business and from which future Economic benefits are expected to flow to the enterprise.

W.B. Meigs and R.F. Meigs  - "Assets are Economic resources which are owned by a business and expected to benefit further operations"

Cash Debtors, Investors, Stock of goods, plant and machineries, Land and building, computers, Vehicles, Goodwill etc are the examples of assets.

Assets may have the value for the business for several reasons; for instance  :

• Cash  have a value because other things can be aquired with it.
• Debtors and investors are assets because business is entitled to get claim from debtors in future and investment may be realised in cash by selling them in the market.
• Building, plants and machinery, Goodwill etc, are also assets because these assets offer some potential benefits or rights or services to the business. Building provides shelter or a place in which business activities may be conducted. Plants and machinery helps the owner of the business to manufacture the goods.

Types of assets

These are the following different types of assets:-

(1) Fixes assets : It refers to those assets which have been purchased by the enterprise for long term use and for resale in the ordinary course of business. The benefit from fixed assets is derived over a long period.

Fixed assets may be Classified as follows:

1. Tangible fixed assets : It refers to those fixed assets which can be touched and seen. These may include movable assets  (such as vehicles, equipment, machinery); Immovable assets (such as land and building) Wasting assets (such as mine, oil Wells).
2. Intangible fixed assets  : It refers to those fixed assets which can not be touched or seen. These are usually the Rights to use, produce or provide the goods and services. For example, Goodwill, patent right, copyright, trademark, franchise etc.

(2)  Current assets : Current assets are those assets which are held:

1. in the form of cash
2. for their conversation into cash, as early as possible
3. for their consumption in the production of goods.

For example, cash in hand, cash at bank,, stock of finished goods, debtors, Bills receivable, stock of raw material etc.

(3) Fictitious assets  : It refers to those assets which do not have physical form and have no realisable value. Such assets can not be converted in to cash. These shown as assets because of their non reccuring nature. All non recurring payments are shown as assets. 

For example, Expenses incurred before the formation if the company (called preliminary expenses), Expenses on issue of shares and debentures by the companies, discount of shares or debentures, underwriting Commission etc.